Below are some of the most recent fundraises for AI сrypto projects: The much-talked-about artificial intelligence has caused a shift in investment and know-how from Web3. Even so, AI and crypto are complementary technologies, with the capability for one to shape the other. This article isn't about crypto vs AI, or which is more superior, but about combining crypto with AI to generate new value. I created it for StealthEX blog
AI is a technology which involves machines mimicking human intelligence processes, and is used extensively across various industries such as supply chains, marketing, product making, research, and analysis.
According to Next Move Strategy Consulting, the artificial intelligence market is expected to be worth $1,847.58 billion by 2030, up from its current value of nearly $100 billion.
Source: Statista.com
The popularity of artificial intelligence soared with OpenAI's ChatGPT release in November 2022, which attracted 100 million monthly users by January 2023. It became the fastest growing consumer app in history, surpassing the likes of TikTok and YouTube, which took 9 months and 18 months respectively to reach the same milestone. Twitter, Spotify, and Netflix achieved similar success after 5 years, 11 years, and 18 years, respectively.
How was ChatGPT trained?
ChatGPT was trained through “Reinforcement Learning from Human Feedback” (RLHF). At first, the model underwent supervised fine-tuning, where instructors operated as both humans and AI bots. Using this method, the trainers built a dialogue sequence that simulated human communication, which was then added to the model's dataset to make it more conversational.
ChatGPT was tweaked by adding a reward model to reinforce learning at the next step. Trainers interacted with the tool and generated responses, ranking them from best to worst.
In this way, OpenAI could refine its model even further using its own technique called Proximal Policy Optimization.
Source: OpenAI Blog
Investments in the crypto-AI intersection are just about to take off
Quite unexpectedly, the month that ChatGPT was released saw turbulence in the crypto world when the well-known exchange FTX suddenly collapsed. This caused a shockwave that saw AI firms captivating the attention of venture capitalists, while the crypto industry was pushed to the sidelines.
Though crypto is still facing challenges, the situation is not hopeless. Investors are just beginning to realize the potential synergies between crypto and artificial intelligence as evidenced by the $422 million that has been invested in crypto projects related to AI this year.
Since its emergence, the crypto-AI intersection has raised more than 10% of all crypto venture capital (VC) funding. Clearly, this combination has enormous potential, and it is likely that we will see even more investment in this area going forward.
Funds and Investors
Aspecta
The Spartan Group
$4,000,000
Binance Labs, HashKey Capital, NGC Ventures, Shima Capital, Infinity Ventures Crypto, Big Brain Holdings, LingFeng Capital, Arcgherman Capital
Delysium AGI
Polygon Fund
$5,500,000
Series A
The Spartan Group, Superscrypt
Orbofi OBI
$2,800,000
Private Token Sale
CSP DAO, Cogitent Ventures, Halvings Capital, OIG Investment Group, Zephyrus Capital
$81,000,000
MayField, Celesta Capital, DCVC, Cota Capital, Marathon Digital, Stanford University
$ 3,000,000
Private Token Sale
Antimetal
$4,300,000
Framework Ventures, IDEO CoLab Ventures, Polygon Fund, Alchemy, Chapter One, Builder Capital
Fetch AI FET
$10,000,000
Unknown
NATIX Network NTXT
$3,500,000
Blockchange Ventures, TechStars, Plug And Play, CV VC, CoinIX, Mulana Capital, Blockarm Capital, XYO, Mysterium Network
$6,000,000
Camford Capital, Plug And Play, Aimtop Ventures, LDV Partners, Acequia Capital
Character.ai
$150,000,000
Andreessen Horowitz (a16z), A_capital, SV Angel, Elad Gil, Nat Friedman
What AI problems can crypto solve?
As a starting point for exploring the AI-crypto tandem, let's examine what crypto can offer AI first.
Crypto can solve identity and verification issues
Generative AI has made it much simpler to generate content, leading to a huge surge of deepfakes.
Statistically, the rate of deepfakes in the US more than doubled between Q1 2022 and Q1 2023, increasing from 0.2% to 2.6%. Meanwhile, in Canada, it increased from 0.1% to 4.6%.
This surge of false information could potentially bring about civil unrest, corporate espionage, and election distortion, making it an important danger to public safety.
This is where blockchain technology can be used to ensure data accuracy and protect against this growing threat.
Moreover, as the world transitions to an AI-dominated era, the presence of bots online is expected to rise, making blockchain-based identity verification systems an invaluable asset. This can be achieved, for example, by decentralized identifiers (DID), pseudo-anonymous identifiers secured with a private key and verifiable only by the private key owner.
Additionally, there is also the concept of Self-Sovereign Identity (SSI) that allows people to store their identity data on their devices, revealing information for validation without depending on centralized databases.
Crypto can decentralize research and development
Due to the advantages of owning large data centers, a few powerful companies may gain a monopoly in the AI market, leading to higher fees and control over users and developers. This could lead to consumers having no other alternatives.
Blockchain technology has the potential to counteract these issues by providing access to decentralized data and computation marketplaces. As a result, AI could become democratized and users could have a say in its development.
Moreover, ethical decision-making can be facilitated through blockchain-based rules which promote open communication and provide users with more power.
A decentralized environment can also be used to train AI models, since more diverse human input from different societal perspectives is possible than in centralized AI training, which only has a limited trainer pool.
Crypto can solve data ownership issues
Blockchain technology can be used to give individuals control over their data, eliminating the risk of a single entity having access to a large amount of sensitive information. Additionally, it enables people to earn rewards for their data, as well as the ability to control how it is used.
Decentralized marketplaces where data can only be accessed with private keys of owners offer the possibility to securely share data for AI training. In this way, people can gain some value from the artificial intelligence they are training without compromising their privacy.
Crypto can provide diversity in data
By monetizing their data, individuals can be rewarded for contributing to new datasets, and developers can test and train models on more diverse sources before deploying them in real-world applications. Ownership of data by individuals, rather than central entities, allows for the wider distribution of data, thus allowing independent researchers to explore new applications of AI, which may yield better results.
Crypto can ensure immutable audit trails
In essence, blockchain is an immutable public ledger, meaning that the data stored on it is transparent, and cannot be erased or altered.
Auditing a decentralized AI system that makes use of blockchain technology to document database updates, AI model retraining, and code modifications allows for a more informed regulation and monitoring of the capabilities and potential biases. Additionally, blockchains can be used as unalterable and open records of errors and mistakes made by AI systems.
What crypto problems can AI solve?
Now let's look at the AI-crypto synergy from the perspective of what AI can offer to crypto.
AI can boost projects’ effectiveness and efficiency
In the same way that AI is improving every industry, it can improve the cryptocurrency industry as well, bridging the knowledge gap between technical and non-technical people. Web3 projects will therefore require fewer operating expenses and perform more efficiently and effectively.
For example, it can be used to automate customer service activities, allowing businesses to respond more quickly and efficiently to customer inquiries. Additionally, AI can be used to analyze large amounts of data and generate insights, helping businesses to make better decisions.
AI can assist with blockchain development and security
AI can be used to improve blockchain networks for speed and efficiency, leading to improved transparency, productivity, and security in the crypto world. Specialized platforms already enable developers to build and deploy AI models on the blockchain, executing on-chain machine learning models.
AI can improve the security of blockchain networks by detecting anomalies and malicious activities, such as double spending or invalid transactions. It can also help reduce transaction costs by efficiently allocating resources and by optimizing consensus protocols.
Additionally, AI can be used to improve scalability and security of blockchain networks, as well as to enhance smart contract development.
AI can improve crypto trading
The world's financial markets are already dominated by algorithmic trading, which relies heavily on program instructions, and artificial intelligence trading bots are the best versions of this type of trading.
AI trading bots use machine learning algorithms to analyze the market and help investors make smarter and more profitable trades. These bots can be programmed to track market movements, identify patterns, and make trades based on those patterns, all without the need for manual intervention.
According to Digital Journal, the global AI crypto trading bot market will grow at a CAGR of 23% between 2023 and 2030.
AI can enhance metaverse development
AI can greatly accelerate the development of highly engaging and immersive virtual worlds. For example, it can be used to generate detailed graphics or create realistic interactions between players and non-player characters, as recently demonstrated by Nvidia. This technology has the potential to revolutionize the metaverse space, and many developers have already seen the potential of AI in this regard.
Final thoughts
Crypto may have taken a backseat to artificial intelligence's initial hype, but it is still crucial to consider crypto and AI together. The future will reveal how these two powerful technologies evolve and interact. However, when combined, blockchain and AI have the potential to open up a world of innovation and possibility, like two powerful keys to unlock a door to a brighter future.
Written exclusively for StealthEX
